The following selected data pertain to Brannard Companys Construction Division for last year. Sales ............... $2,000,000 Variable

Question:

The following selected data pertain to Brannard Company’s Construction Division for last year.
Sales ............... $2,000,000
Variable costs ............ $1,200,000
Traceable fixed costs ......... $200,000
Average invested capital (assets) ... $3,000,000
Current liabilities .......... $200,000
Required rate of return ........ 15%
Marginal tax rate .......... 36%
Weighted average .... 12%

REQUIRED
A. Calculate the residual income.
B. Calculate the return on investment.
C. Calculate the economic value added.

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...